Is California's Low Carbon Fuel Standard Unconstitutional?

By Robyn Hagan Cain on October 17, 2012 9:01 AM

If Tuesday's oral arguments before a Ninth Circuit panel are any indication, California's Low Carbon Fuel Standard is in trouble.

The standard relies on a "carbon intensity score," which measures pollution from a fuel's entire life cycle — such as the type of electricity used to produce it, or the fuel used to transport it to California — not just when it is burned in a vehicle, reports The Associated Press.

The question is whether that method of calculation qualifies as protectionism, which is prohibited under the Commerce Clause.

California approved the Low Carbon Fuel Standard after the adoption of AB 32, the Global Warming Solutions Act. The Low Carbon Fuel Standard is a California Air Resources Board (ARB) regulation promulgated to reduce the carbon intensity of fuels sold in California 10 percent by 2020. It is designed to help clean the air, protect the environment, and drive the development of clean, low-carbon fuels to improve California's "energy security and energy independence," according to the ARB.

The standard has faced opposition from the oil and ethanol industries, which argue that the ARB grossly overestimated how much biofuel can be brought to market to offset higher-carbon fossil fuels. The Western States Petroleum Association called the policy a "disaster-in-the-making" that will raise the price of fuel for consumers, reports Climate Watch.

Last year, U.S. District Judge Lawrence O'Neill enjoined implementation of the Low Carbon Fuel Standard, finding that it was unconstitutional because it discriminated against interstate commerce by assigning a higher carbon intensity score to ethanol produced in the Midwest, which is otherwise chemically and physically identical to that produced in California, reports Bloomberg.) In April, the Ninth Circuit Court of Appeals lifted the injunction.

Tuesday, lawyers debated the constitutional implications of the rule before a three-judge panel. Environmental groups and Deputy Attorney General Elaine Meckenstock defended the law, saying that California has the right to reject fuels that are produced in a climate-threatening way. Industry attorneys argued that the law violates the Commerce Clause by illegally favoring California industries, the San Jose Mercury News reports.

The panel seemed to agree with the industry's lawyers.

During arguments, Ninth Circuit Judge Mary Murguia asked the state if there was "no other way" to achieve its air quality goals. Judge Dorothy Nelson cited language in the law pointing to California employment and tax revenue benefits, and questioned, "Isn't this unambiguous evidence ... of protectionism?"

With two-thirds of the panel skeptical of the law's legality, the ARB may have to scrap or revise the rule.

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